Monthly Archives: April 2018

I’m going to keep this short and sweet so you can get back outside and enjoy the spring weather that finally arrived!

Crude prices are continuing to stay at the highest levels since 2014 and WTI is preparing to break through $70/barrel. Gasoline retail prices are now over $2.50/gallon and diesel retail prices are over $3.00/gallon. Historically, these prices mean that customers start to consider changing behaviors. The amount of “free spending” money that has been sucked out of the economy due to these price increases is staggering. Based on the amount of gasoline gallons sold per day (this does not even include diesel fuel), $300,000,000/day additional is now being spent on gasoline compared to when gasoline prices were at $2.00/gallon! The increase in money spent on fuel is going to catch up quickly to consumer spending behaviors. Right now the risk premium is still on for crude. We need about $8/barrel to come off of crude prices to get cost back in line with consumer sentiment. But I don’t see a possibility of that happening until we get through the Iran nuclear deal deadline in the middle of May. So for now, be prepared to spend your extra cash on gasoline.

Propane prices have skyrocketed in the last week due to do increased demand in April and lack of building inventory. I don’t expect to see retail prices go much lower, if at all, over the coming two months. Next year’s contract pricing will be released probably in June. Summer fills are probably going to be very close to today’s prices. More information will continue to be released and updated.

As always, if you have any questions, comments, or concerns, please feel free to give us a call.

Crude oil prices have been on an absolute run this week. Continuing from the Syria attacks, crude prices continue to find bullish support in geopolitical tensions. Traders are worried that Trump will pull out of the Iran deal and cause 500k barrels of crude to come off the table which would put the market into deficit by end of summer. In addition, physical inventories in the U.S. dropped to four year lows this week. Then after WTI broke through $67/barrel, Saudi Arabia came out and said that they would love to push WTI crude past $70/barrel towards $80/barrel. Seems like no matter what anyone says that can be interpreted as bullish for crude, traders are finding tread to grind prices higher. An interesting fact though is that the U.S. increased production to another record and is now pumping 10.6M barrels/day of crude. We are getting very close to over taking Russia and our increase in production is happening much faster than expected. At these rates, without any change in supply disruptions from the Middle East or Venezuela, the world crude oil market will start to move into surplus inventory building by the end of the year or sooner. In other words, a major correction could be on the horizon towards the end of the year. I just don’t see what has drastically changed in true physical crude fundamentals to cause a $10/barrel spike in prices. But for now, we are holding on tight until the end of the month.

In local news, spreads in gasoline prices are all over the marketplace. The fact is that gasoline and diesel prices have gone up. I expect to see gasoline prices well above $2.49 gallon, and diesel prices above $2.89/gallon.

Propane has steadied out due to the massive increase in demand for April. We are officially experiencing the coldest April on record which is very supportive of propane prices. Like crude oil, we are hanging on tight until the end of the month and then reevaluating. Information on summer fill and next season’s contracts will follow at some point in June.

As always, if you have any questions, comments, or concerns, please feel free to give us a call.

As the trade war potential with China was cooling and putting a little floor on WTI around $61/barrel, President Trump tweeted aggressive responses in Syria and taunted Russia. With stability in Syria being very fragile at the moment, the tweets from President Trump caused an immediate $5 premium to be added on to both WTI and Brent, along with a 20 cent per gallon increase in cost of both gasoline and diesel. Until we hear what the U.S. is going to do in Syria, we will hold these numbers. If we decide to not escalate the situation any further, traders will sell the news and back down towards $60 WTI we will go. Regardless, for right not it’s sit tight until maybe the end of the month.

In local news, retail cost of gasoline and diesel both increased near 20 cents/gallon, so I would expect to see retail prices climb.

Propane prices are nearing the lowest of the last six months. However, demand has been very high this April. I would expect to see summer fill prices not start until towards the end of May at this rate. More info to come over the coming weeks.

As always, if you have any questions, comments, or concerns, please feel free to give us a call.

Well, the game of Ping-Pong continues on the crude market. This week, due to the fears of a trade war with China, WTI crude took a dip to it’s lowest close in almost six weeks. In addition, geo-political concerns in the Middle East and North Korea seem to have taken a back seat to the talks on Chinese tariffs and NAFTA. Like the DOW, WTI has been very volatile this week. WTI seems to have a bit more momentum to push back towards $60, but there are still a lot of long positions on crude that would need to unwind. Also, a cooling of the economy coupled with a week dollar will put the crude trade in an interesting position now the China is trying to push crude purchases using the Yuan. If demand erodes and the dollar tanks, it will be interesting to see how crude reacts.

Retail prices on gasoline have stabilized for now. Summer pricing for gasoline is now baked in to our cost. So now we should see retail move more based on crude. Diesel is done with winter blending so pricing will be most affected based on demand going into planting season whenever this cold weather ends.

Propane futures hit an excellent entry point and most suppliers entered positions for next winter. As I’ve stated before, so far we are seeing contract prices for next heating season very close to this season’s prices. Please make sure to check your tank if you are on will-call delivery service with us. This cold weather has caused a late season demand that most people were not prepared for. Summer fill and next season’s contracts will be out in a couple of months. More info to come.

As always, if you have any questions, comments, or concerns, please feel free to give us a call.